An improved serum-free medium (LEP/MK2) has been developed for mouse keratinocytes (MK) and found to support continuous growth for at least 75 subcultures (more than 200 doublings). The established line has a reduced requirement for the factors in LEP/MK2. In addition, the responses to serum components decrease with time in culture. At high passage levels, sensitivity to growth inhibition by serum and by TGF-B was found to decrease with time, but was not abolished. MK cells rapidly lose their normal karyotype. By passage 4, they are essentially tetraploid with random gains and losses of individual chromosomes. These rapid chromosomal alterations may form a basis for the observed altered response to exogenous factors. The MK system is to develop a reliable selective assay for epithelial transformation and to investigate mechanisms of transformation by chemical carcinogens and oncogenes. For rat tracheal epithelial (RTE) cells, an improved serum-free medium (LEP/RTE 2) was developed, which supports clonal growth of primary RTE cells. The growth promoting activity of bovine pituitary extract, a critical component of LEP/RTE 2 medium, was found to be acid sensitive, heat stable, trypsin insensitive and had a molecular weight greater than 5000. When the induction of preneoplastic RTE variants by the carcinogens, N-methyl-N'-nitro-N-nitrosoguanidine (MNNG) and beonzo[a]-pyrene-diol-epoxide (BPDE), in cells plated in serum-containing medium on feeder cells or in serum-free medium was compared, MNNG was considerably more cytotoxic and potent as a transforming agent in serum-free medium than in serum-containing medium. The cytotoxic and transforming activities of BPDE were equivalent under both conditions. Development of serum-free media for both of these systems simplifies studies of altered growth control in carcinogenesis.